1. Discovering Data In this problem you will use data from the Bureau of Economic Analysis (BEA) to investigate the dependence of the United States on foreign markets over time. Go to the BEA website at www.bea.gov and under the “National” tab open the interactive table for “GDP and the National Income and Product Account (NIPA) Historical Tables.” Open Table 4.1 for “Foreign Transactions” and download the data going back to 1969.

a. The current account is the difference between “current payments to the rest of the world” and

“current receipts from the rest of the world.” What is the latest estimate of the current account?

b. Create a graph that shows: Current receipts, Current payments, and Current account over time.

c. In what year was the current account largest? How would you characterize its trend over time?

How would you characterize the trends in receipts and payments?

d. The United States current account deficit grew significantly from the 1990s up until the financial crisis of 2008. In principle, this growth could have occurred because of falling receipts from abroad or increasing payments to foreign countries, or both. Which factor appears to have driven the growth in the current account deficit in this period?

e. What does the evolution of the three trends you plotted in part

(b) tell you about the reliance of the United States on foreign markets? Does the country appear to be growing more open or more closed over time?